Me Form Tax 2012-2021: Fill & Download for Free

The 20% LTCG applies to Debt MF. For Equities, Direct and MFs, the LTCG taxation is different. Before asking a question, you must understand how LTCG and tax is calculated.If you know this already, let me ask you a counter question and you provide me the answer.a) You have invested Rs. 1,00,000 in some Debt MF in 10-Jul-2012 (fin year 2012–13)b) You sold the same fund units on 27-Jan-2021 and received Rs. 3,50,000 (fin year 2020–21)Please calculate the indexed LTCG and the tax at 20%.Write the answer in comment and I will then answer you.

About a 1000 years ago, the rulers of England, France and others would raise a special tax called Danegeld - just to pay the Vikings and plead them not to ravage their lands. It is basically a ransom.The shoe is on the other foot now. In the modern day, the Vikings often use the Nobel Peace prize as a ransom money to attempt to buy off "dangerous politicians" who might ravage the world [in their opinion]. This is how a lot of Nobel Peace Prizes have been given out these days and it would not be really out of place for Donald Trump to be there in that list if he goes all the way in November.Let me show some examples of its political puppet mastery in recent times:Obama was awarded in 2009 right after his elections just to not be a Bush.Gorbachev was awarded in 1990 just to give 1 more push to breakup the Soviet Union.Israeli Prime Ministers have been awarded the prize thrice - every time around a peace meeting. Yasser Arafat and others were also provided the same. All those peace prizes have not changed the ground reality.EU was awarded in 2012 at a time when the group was teetering collapse with Grexit. There was very little rationale to award it to such a large body otherwise. What's next - award it to the whole blue plant for not breaking apart?OPCW [chemical weapons control] was awarded in 2013 right after Syrians used chemical weapons, just to put more spotlight into that issue.The 2014 award was shared between an Indian and a Pakistani, partly because of the West's fear of increased hostility with a change of regime in India. By making an Indian and Pakistani share the dias for a good cause, they thought they were helping the local media talk about the positives of people-people relationships.I'm not questioning their intentions for helping world peace. Just I'm not convinced that many of the recipients are the best in promoting world peace.

Let’s start with a related story. I witnessed an interesting incident long back in Delhi when private buses were introduced and Delhi Transport Corporation (DTC) started making even more losses.I observed an interesting pattern wherein the DTC buses were almost running empty & the private buses were over-crowded. Were the private operators running luxury or AC buses that time? Not at all. In-fact their buses were worse in quality. So why were private buses running full & DTC ones always empty?A little probing with the “industry folks” revealed the reason. A very interesting private enterprise innovation when their services were not even at par. On every route, the private operators used to pay the DTC driver every day for one job. The DTC bus should always be behind the private bus on the same route by about 5 minutes or more. The outcome, people waiting at bus stand are likely to get on the first bus that comes along. The private guy gets all the passengers and the DTC bus follows 5 minutes later when there is hardly anyone at the bus stand. The driver earns his salary as a govt servant and also earns “incentives” to run late. As a govt employee, his job is safe. He doesn’t have to earn profits or worry about running on time or customer complaints. He didn’t join DTC on those terms. Accountability is not on the job description in government jobs.This story will help us understand the Air India situation much better as we shall see. Where should we start?Well, to understand money, we’ll need to see where the money comes from and what it is spent on. Let’s see the balance sheet, profit & loss account of Air India.Notice the highlighted sections. It adds to Rs 52,000 crores ($ 7.3 Billion). What is it?It is the debt, the money Air India borrowed to buy planes. In a business where all efficient carriers lease the planes and pay the lease every year, Air India chooses to have its own planes. Why? This is a lesson in economics on why socialism looks like a beautiful concept in theory, except that it doesn’t work. The story is quite telling in the ways how every stakeholder in a PSU tries to maximize the wealth, personal wealth that is, not for the country.2005:The year Air India became a cash cow like never before.I quote from “the statesman” article by Devendra Saksena ( IRS officer):But why such a hurry to buy planes when nobody buys them ? Prafull Patel was the aviation minister from 2004 to 2011. He was from the “Nationalist Congress Party”. Hmm…some nationalism this was !! May be nationalism meant different things those days.2012:Ajit Singh takes over in 2011 & stayed till 2014. The shoe started to pinch, but who cares. Restructure at the tax payers’ expense. Here is a snapshot of what he did in the drivers seat.So firstly, government gives away the profitable international routes to private players outside India under bi-lateral arrangements (Recall the bus driver who got paid to run late on the routes!!) and then goes ahead to order 90 new planes when it could easily have leased the planes like everyone does. With a liberal agreement that had no penalties for delayed deliveries. You think such big plane orders are signed just like that, that too in government?Looks like the “drivers of Air India” got a fairly good deal. And the press freedom was on leave, I guess. This was 2012 by the way. A policy decision that should have got a hard beating was applauded.Look at the headlines in the papers in 2012? Turnaround ?Does the above plan looks even close to restructuing ? Govt making the PSU banks pay for the accummulated losses & then converting working capital to debentures at 11% to be used to pay the banks !! Restructuring of a kind.So why is the debt such an issue ? After all it was used to buy the planes ?Not really. First of all, the planes were bought at much “favourable prices”. Favourable to the sellers that is. But that is another debate. More importantly, what does this debt of Rs 52,000 crore do to Air India every year? See the Income statement :Look at the section in red. Rs 4500 crores of interest cost every year. EVERY YEAR!Interest payment is more than the entire employee cost of Air India. Try making a profit with that kind of interest. So here is a “national interest” quite literally, which is not in national interest !Now for those of you who argue that Air India is doing fine operationally, see the losses. At 55,000 crores, losses are more than the interest payments. Which means that even of there was zero debt, AI would still be making losses. Have you seen a business run where expenses are 103 % of revenue? And all this when you own the planes !! Examine the Indigo P&L & see how it manages all expenses within 85% of revenue.So the expenses have to be 85% range of the revenues to make profits. This includes employee costs of 10% & finance costs as well. Air India expenses are 103% of revenue even before any interest payments. So they own the planes,no lease payments & still can’t run operations under budget. Beat that !!Want to compare how the debts look like for other airlines?As you must be wondering, if Jet Airways can go down with the same aircraft strength but much lower debt, the Maharajah should have been dead long back. Yes, but for the “restructuring packages” by the government. We shall address this later.This debt is like a guillotine around the neck for Air India. It is not going away and the airline can’t make a profit with such interest payments, unless everything else becomes world class. As you can imagine, the airlines is not world class even on other metrics. Let’s see one by one.Employee strength & related costs: With 122 aircraft in its fleet (including Air India Express), the national carrier has 221 employees per aircraft compared to 127 per plane at Lufthansa (38,000 employees : 299 aircrafts) and 140 at Singapore Airlines (14,000 employees : 100 aircrafts). This is the worst employee per aircraft ratio in the world.It is a fact that they are overstaffed. Positions were created to please political bosses. Staff was not hired according to operational requirements. People were hired not for competence but for connections," said captain Mohan Ranganathan, an aviation safety consultant.Not only overstaffed but at much higher wages than necessary. Consider this: Air India's average employee cost in 2017 was Rs 21 lakh per annum. The average cabin attendants’ cost was even higher at Rs 24 lakh per annum. IndiGo's average staff cost was Rs 14 lakh and average cabin attendant cost was just Rs 6.1 lakh per annum. So an Air India Air Hostess gets paid 4 times compared to the Indigo crew. Wow! Now with that high staff costs, you would expect the services of a “Maharajah” on air India. No sir, it actually means that the employees are the Maharajahs.Service levels: Is it really necessary to talk about it? Well if you insist, I’ll quote from the statesman article again as I have nothing more to add.2019: The brazenness continuesThe airline, with total debt of around Rs 58,000 crore, has sought the government's approval to borrow Rs 2,400 crore from the NSSF account to meet its working capital requirements. Explaining the justification for fresh demand, a senior Air India official told the news agency that the government is yet to give Air India financial support of Rs 2,484 crore, the balance of the bailout package extended to it by the UPA II regime in 2012. Under the package, a part of a financial restructuring plan for the national carrier, the airline was to receive budgetary support of Rs 30,231 crore over a 10-year period ending March 2021. The ailing Maharajah has thus far managed to stay afloat thanks to this bailout package but it has already devoured over Rs 27,000 crore of the allocated amount by end 2018.So the airline would have eaten away Rs 30,000 crores in “restructuring package” from the govt in last 10 years. This is aside of the Rs 58,000 crore debt that is already looking difficult to recollect. Want to know who gave this debt in the first place? Look at the list of banks below:Do you see any private sector bank in the list ? It is all PSU banks with tax payers money again. Still wondering why Govt run organizations always run in losses? Well, because nobody cares. Just like our DTC driver above as well as people right at the top who have distorted nationalism benchmarks. Until it is time to shut down. And the time is now.Meanwhile there are small mercies that we should be thankful to. In view of the upcoming divestment, the Maharajah has put its “expansion plans” on hold. Thank Air India for this. Let this be their last favour to the nation.Feel free to mail or write to me on twitter.Honest - Unbiased - Simplified, as always.References:Air India turnaround plan, Dreamliner induction gets govt nodAir India seeks nod for Rs 2,400 crore loan from National Small Savings FundLoss-making, over-staffed Air India to hire moreAir India unplugged